The Hindu Business Line : Tyre industry demands duty-free import of 1 lakh t natural rubber

Kochi, July 30 With a serious crunch operating in the availability of natural rubber (NR), the tyre industry has reiterated its demand for duty-free import of 1 lakh tonnes of NR without any further delay.

The tyre industry, that consumes 57 per cent of the natural rubber produced in the country, is facing the worst ever raw material availability crisis. Over the last few days, the availability of sheet rubber has been woefully inadequate to meet the requirement of the industry that is already bearing the brunt of high rubber prices, Mr Rajiv Budhraja, Director General, Automotive Tyre Manufacturers’ Association, said. Currently, domestic NR prices are ruling at a higher level than even international prices. Natural rubber accounts for 41 per cent of the raw material cost in the tyre industry, he said.

“It has never happened that the very availability of sheet rubber becomes an issue despite the fact that the natural rubber prices have touched a historic high. The average landed price of NR was Rs 134 during July, which is 51 per cent higher than the average price in September last year,” he said.

Anticipating price

Despite the fact that the production of natural rubber has gone up by almost 30 per cent during April-July this year, the industry is facing the crunch. On the contrary, consumption has gone up by only 21 per cent in the said period. It is believed that rubber growers and traders are holding on to the stock in anticipation of further rise in the prices of rubber, he alleged.

“The supply crunch, if continued, is likely to seriously disrupt production schedules of tyre companies. We therefore urge the government for immediate intervention by way of allowing the duty-free import of 1 lakh tonnes of natural rubber to tide over the current crisis,” Mr Budhraja said.

A demand-supply imbalance is unfortunate for a commodity where a fine balance can be achieved if producing and consuming interests work in tandem. The production-consumption gap, which was 49 per cent during April-July 2007, has narrowed down to 22 per cent in April-July 2008.

The industry will, unfortunately, need to look for increased imports if the existing availability crisis does not subside, he added.

Competition edge

Under present circumstances, if duty-free NR import is not allowed or the availability issue is not resolved, the competitiveness of Indian industry will take a severe hit. Already, the tyre manufacturers are faced with a non-level playing field in view of large-scale dumping of tyres in India from China, he said.

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